On Being Cheaper Than Gas

There has been quite a lot of focus recently on what a 100% renewable grid might look like. The focus is generally on a grid using a mix of solar PV and wind with some hydro and an assumption that battery storage will be used to smooth supply to match demand patterns.

There are generally two approachs to a grid set up like this.

Option 1 is to set up your generation capacity so that over the couse of the year it generates 100% of the required electricity consumption (plus whatever safety margin thought prudent). This is likely to involve shifting solar PV generated electricty from the middle of summer to late winter. If all you allow yourself is wind, solar PV and batteries this might involve a lot of storage, perhaps prohibitively large amounts of storage.

Option 2 is to set up your generation capacity so that the amount produced at your lowest ebb is equal to the demand requirements. For example, you would build enough solar PV so that the electricty output on December 21st was equal to the demand on December 21st. Or perhaps you'd look at your worst week. This means less battery storage but during the summer when solar PV is very productive you probably end up throwing away quite a lot of electricity.

I've not seen any modelling on the demand shifting impact of pricing or how the storage requirements are impacted by larger grids or adding small amounts of biomass-fired generators or some small modular nuclear reactors. That's all probably helpful but probbably still leaves the 100% Renewable Boosters with some work to do.

This is all well and good and completely irrelevant to the renewable electricity industry. Nobody today has to be aiming for 100% renewables tomorrow.

At the moment wind power and solar PV in good locations are as cheap or cheaper than building new thermal generation plant. The cost of wind and solar PV is falling. Up until the point where the maximum generation of all non-despachtable renewables is about equal to the amount of generation that can be turned down or off easily then it makes economic sense to keep adding renewables. Then add a bit of interconnector capacity. Particularly if you don't happen to own any of the gas or coal plants who are having their market share reduced. The spinnng reserve already exists and if it goes bankrupt it still exists, just owned by a bank.

Looking further ahead, it isn't necessary for renewables plus storage to be able to cover 100% of demand as it happens in order for renewables to become the dominant form of generation. The price point renewables need to reach is to be cheaper than the gas or coal burnt in a thermal plant. At that point you don't have to decide between solar PV and a Combined Cycle Gas Turbine, it's cheaper to build both and use the solar PV as cheap fuel for the gas plant.

And it looks like in some parts of the world solar PV has already reached that point.